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The commentary below provides further detail and insight into the Fund returns.

The Fund returns below show the returns compared to benchmark for the composite of the Trust Investments Group Investment Funds to 31 March 2020 and the Trust Management PIE Funds from 1 April 2020.

For more information on the Funds, please view the PDS and Quarterly Fund Updates


The Balanced Fund invests in the other five sector funds.  It maintains a moderate risk profile with a well-diversified target asset allocation of 35% Fixed Interest, 35% Shares and 30% Property.  The Fund has a strong focus on the distribution of income with moderate levels of investment risk. 

The Fund returned 3.9% for the three months to September 2020, recovering strongly from the weakness experienced earlier in the year.  The Fund delivered +6.9% for the 12 month period, while on a rolling 5 year basis, the return was a strong +9.7% per annum. 

Share markets have performed well since March with better-than-expected economic data and extremely accommodative fiscal and monetary policy settings helping to support demand for growth assets such as shares and property.  Bonds have also performed well, responding to falling interest rates as central banks around the world cut interest rates (bond returns and movements in interest rates tend to move in opposite directions).

We expect volatility across financial markets in the near term to remain a key feature as uncertainty continues over the outlook for economies and companies.  Longer term, returns from growth assets should be supported by the combination of low inflation, accommodative monetary policies, and a recovery in global growth expectations. 

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The Fund posted a small gain of 2.5% for the three months to 30 September 2020, to give a return of 5.1% for the twelve month period.

Just over 50% of the portfolio was revalued as part of the monthly asset rotation process during the six months from the end of March 2020.  As the underlying properties comprising the fund have been revalued, the asset values, on average, have recovered to levels similar to start of the year.  The Fund continues to be overweight the industrial sector which has a more limited Covid-19 impact than the office and speciality retail sectors.  

The Fund has experienced an increased level of investor inquiry and the Manager is currently looking at a number of properties for purchase for the Property Fund.  The defensive nature of the quality assets and tenants within the Fund continues to position the Fund well.

The Fund has a strong emphasis on generating regular income for investors with quarterly distributions. For the purposes of this analysis, the performance of the Fund is compared against the returns of the NZX 90 Day Bank Bill Index +2.5%.

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The Fund posted a return of +2.4% for the three months to 30 September 2020, to give a return of 5.6% for the twelve month period.  Bonds have performed well in 2020 given the fall in long dated fixed interest yields. 

New Zealand bonds outperformed global bonds during the quarter.  The 10-year NZ Government Bond yield touched a record low, hitting 0.44% before closing the quarter at 0.49%, while the shorter dated 2-year NZ Government bond yield briefly hit negative territory. 

The Reserve Bank of New Zealand in September maintained the Official Cash Rate (OCR) at the record low level of 0.25%, signaling it expects to keep the OCR at this level until at least March 2021.  Financial markets have continued to price in the strong possibility that the OCR will be cut into negative territory next year although at this stage it remains unlikely that retail deposit rates will go below the 0% lower bound.  With bond yields now at record low levels, there is a risk of capital loss over the medium term as bond markets eventually transition to a higher growth environment.

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The three months to September saw global bond yields move slightly lower, leading to a small gain in the benchmark FTSE World Government Bond Index (NZD Hedged) of 0.7%.

A less optimistic tone in September saw bond yields move lower during the quarter, although many of the major economies saw their 10 year bond yields trade in a fairly tight margin. 

A major influence on bond returns during the quarter was the US Federal Reserve’s unveiling of its revised long term monetary policy strategy where it outlined an intention to adopt a more flexible inflation targeting policy.  At its September meeting the Fed outlined it would maintain the Fed Funds rate within the 0-0.25% range until such time as labour conditions had vastly improved and inflation was likely to exceed the 2% target for an extended period of time.  The implications are that interest rates will likely stay low for a number of years to come. 

In Japan, the resignation of Japanese Prime Minister Shinzo Abe had some impact initially on financial markets with investors initially concerned his replacement may not continue with the same fiscal and monetary policy programme.  Abe’s successor, Yoshihide Suga, is expected to continue Abe’s expansive macroeconomic and reform policy.

The Fund returned +0.7% for the three months to September, and +3.9% for the 12 month period.  We expect short and long term yields are expected to remain anchored at low levels for some time to come given the high degree of monetary policy support. 

The Fund invests in an index fund that invests only in sovereign securities.  This product tracks the FTSE World ex-Australia Government Bond Index hedged to Australian dollars.  A further hedge is applied to hedge the Fund’s Australian dollar exposure to NZ dollars.  Returns tend to lag the benchmark slightly as the cost of hedging is excluded from the benchmark return calculation.

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The Fund posted a strong return of +9.1% for the three months to 30 September 2020, to give a return of 11.7% for the twelve month period, strongly outperforming the market index return of +6.9% and +2.8% respectively. 

Despite the strong returns for the index during the latest quarter, there was significant dispersion across single name stocks.  Among the large capitalisation stocks, both Fisher and Paykel Healthcare (-7%) and the a2 Milk Company (-24%) gave back significant gains experienced earlier in the year.  In contrast, Mainfreight (+17%), Summerset (+38%) and some yield stocks including Chorus (+15%), Goodman Property (+16%) and Vector (+19%), gained strongly.

Within the Australian market, the technology sector performed strongly rising by +13%, while the real and consumer sectors also recovered.  Energy companies fell 14%, following a lower oil price.

Earnings growth expectations for the next twelve months continued to drift higher in the period led by Mainfreight, Summerset, Ebos and Fisher and Paykel.  Overall, in the recent company earnings round, a strong net percentage reported better earnings, and post result earnings upgrades beat downgrades.

The portfolio has performed well this year relative to the benchmark index.  The Fund continues to be overweight the healthcare, technology, and consumer staples sectors relative to the benchmark index.

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The Fund performed strongly, gaining 5.9% for the three months to September 2020 and 8.3% for the 12 months.  Regionally, the US and japan were the strongest performers, while the UK and Europe lagged.

After performing strongly in July and August, September saw a retreat in share prices with the MSCI World Index, a measure of global share market performance, recording a decline of 2.9% in local currency terms for the month.  The large declines were initially centred on the big technology names given the strong recent performance, however the falls became more widespread as the month wore on.

Technology stocks experienced the most volatility, gaining almost 20% in the first part of the period, before declining 7% in September.  Technology gains were led by Tesla (+99%) and Apple (+26%).  Cyclical sectors (particularly energy) underperformed, while large cap US technology names performed well along with industrials and materials companies. 

While investors have been buoyed by positive developments on the health front despite rolling second waves of infections around the world, the main risks for markets in the near term continues to be US developments – in particular the US elections and the prospect for further fiscal stimulus.  Any failure by US politicians to sign off on further stimulus measures would be negative for the US recovery.  We expect further volatility in share markets given the uncertainty. 

The Fund invests in an indexed product that excludes companies involved in the manufacture of tobacco, controversial weapons or nuclear weapons, along with companies that exhibit poor adherence to international norms in relation to environmental protection, human rights, labour standards and corruption.  The Fund’s sustainability criteria also aims to have a lower exposure than the market index to high carbon emitters.  The Fund’s foreign exchange exposures are 50% hedged to NZ dollars.

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Returns are gross of management fees and expenses, and are annualised for periods of longer than one year. Past performance is not indicative of future performance and is not guaranteed by Trust Management, the Supervisor, or the underlying Investment Managers. For further information please refer to the Product Disclosure Statement and Quarterly Fund Updates at, further information can also be found at, under offer number OFR12861. Performance calculations for the Funds comprise the returns of the Trust Investments Group Investment Funds up to and including 31 March 2020 and for the Trust Management PIE Funds from 1 April 2020.


Under the Financial Markets Conduct Act this communication may be deemed to be an advertisement for an offer of units. Trust Investments Management Limited is the issuer of the units to be issued under the offer to which this advertisement relates. A product disclosure statement for the offer, which sets out the terms and conditions of the offer, is available, and can be obtained at